Situated in the heart of the Silicon Prairie (the western Chicago suburbs), Silvon Software is a leading developer and supplier of cross-platform decision support systems for manufacturing, distribution and retail enterprises throughout the world. Michael J. Hennel, president and chief executive officer of Silvon Software, is one of the company's four original founders. Hennel and the other three founders, Marty Acks, Frank Bunker and Bill Skowera, all came from Pansophic Systems, a midrange company that in 1987 was working with IBM on a prototype server--Silver Lake--which became IBM's AS/400.

The four left Pansophic Systems to form Silvon. Hennel and the other founders felt strongly that the AS/400 was probably going to be one of the last midrange servers that would actually pull a software company. In fact, the name these founders chose for their fledgling company was a play on words for "on Silver Lake." While "on Silver Lake" sounds like an idyllic location, those words described the foundation for the company's technology and not their original corporate offices. Hennel explains, "When we started out, we were fortunate that Xerox was a client of ours. They let us sublease space from them in a converted warehouse that was a mainframe data center. We had solid, one-foot metal doors with the two-foot concrete walling into a raised bunker--and no windows! When someone came to visit us, it was like trying to get into Fort Knox. But there were some benefits--we had basketball courts out in the back and huge outdoor barbecues on Fridays."

Silvon has come a long way in the last ten years, growing from four to nearly 200 employees, now occupying two floors of a modern office building in Westmont, Illinois, and reporting annual revenues in excess of $20 million. Through careful management and strategic evaluation of the marketplace, Hennel has led Silvon on the path from start-up to success. He has been able to accomplish that because, in his own words, "I'm a builder. Before my kids came along, I liked doing a lot of remodeling around my home and building things. But now I'm basically focused on continuing to build Silvon. I like being very much tied into product direction, and I spend a lot of time with customers and prospects. That's what I like doing. And there are not a lot of people that have built successful software businesses over $20 million. I view the overall building of Silvon as something that I'm very proud of," Hennel states.

"Back in the eighties," Hennel explains, "the model for a software company was that if you tied yourself to the right hardware platform and if you did the right job with products, you could be very successful, and that's how we started. We also identified business areas that were not well-automated and business areas that we felt would undergo structural change as a result of both business and technology drivers. We actually began in 1988 with two different product lines."

One of those product lines was software development management which was focused on automating MIS. Hennel explains, "We recognized that the MIS people were like the shoemaker's kids. They spent all of their time automating everyone else but never automating their processes. That was a very successful product line for us. However, in July of 1998, we announced a sale of the software development management business unit to Mortice Kern Systems so that we could focus all of our efforts on our very successful DataTracker product line."

"From day one, our approach has always been to understand the business problem and provide a solution. We are business driven, not technology driven," Hennel emphasizes. "Our objective is to get our customers up and running and successful with all of their data faster than anyone else. And we've been very successful in doing that. Our biggest challenge, quite frankly, is market awareness. Back in '88, we weren't selling data warehousing; we weren't selling OLAP. What we were doing was telling customers how we could help solve the basic business problems they were having in sales and marketing. They didn't care about the technology. For the past two years, our challenge has been to make sure that people understand our technology and the power of the applications that we deliver. We've done a really good job of gaining a lot of credibility in that area. However, now we're again focusing on making sure that prospective customers really understand the applications that we're delivering and how these applications can solve business problems. The mass market really doesn't care about the tools--what they want is a solution," Hennel comments. "Most businesses have come to the realization that there is a great deal of additional value that they can get by understanding the information that has been locked in their systems for years. Technology can deliver the business solutions, and I think customers see that this is where they can gain a lot more business value. They want to understand how we are going to be able to help with customer profitability analysis or merchandise planning. They'll still kick the tires when it comes to technology, but they rely a lot more on references and what you've done for other people. We're excited about that because that plays back to our strengths," he adds.

According to Hennel, many mid-sized companies are anxious to implement data warehousing but are looking for a solution that reduces the cost, time and complexity of a fully customized data warehouse. To address this need, Silvon has developed DataTracker which is an application-specific data mart. DataTracker, Silvon's data mart platform, is a business intelligence system that provides extensive reporting and analysis capabilities to enable business managers to make timely and effective business decisions. DataTracker provides support for loading, maintaining and accessing data organized to support multidimensional analysis. Data can be stored in leading relational databases such as Oracle, IBM's DB2/400 and Microsoft's SQL Server 6.5/7.0. Hennel adds that the majority of Silvon's current customer applications are AS/400-based but Silvon also offers DataTracker for WindowsNT and soon will offer the RS/6000-AIX platform.

"We are currently in beta right now with DataTracker 3.0," says Hennel. "This version reflects the third generation of our underlying architecture, so it's a significant ramp for us. We believe that it is going to allow us to stay well ahead of our customers. Currently, most of our customers have data marts in the 5GB to 500GB range. The technology that we have in DataTracker 3.0 is going to get us easily to a terabyte. We think that what we have under the covers is the technology that is going to continue to scale and to be well ahead of where our customers are heading. We're continuing to make sure that from a technology perspective we invest in the areas that make our technology the best for the supply chain. Secondly, our focus is to make sure that we do a good job of complementing the Microsoft environments. Microsoft likes our story because of how we scale on SQL Server. We are going to embed more Microsoft technology into our products, and customers will be able to easily create and deploy user-driven analysis scenarios in Plato MOLAP cubes using DataTracker as the multidimensional enterprise OLAP data source and Office 9 desktop tools for visualization," adds Hennel.

A challenge for Silvon involves the international marketplace. Hennel elaborates, "If you go back five years, a high percentage of customers were still putting the data warehouse on the same box as their transaction processing system. That's still happening in Europe. The data volumes are somewhat smaller, but they're embracing data warehousing. However, it's still a very fragmented market, and they don't fully understand the strategic value that these types of applications can provide. We see the Asia/Pacific area probably a couple of years behind Europe. We think that market will catch up to Europe very quickly, but now it's still a market where we're doing a lot of pioneering and missionary work. People there want to understand the basics of data warehousing, and they want to understand what this is really going to do for their business. Consequently, we have to do a lot more education in that marketplace right now. Even though one-third of our revenues come from international sales, it should be much higher. From our standpoint, we have to make sure that we continue our penetration overseas and realize that it will probably be two years before we start seeing more of the characteristics of the U.S. market," Hennel explains.

Managing a dynamic organization can also be challenging. Hennel has implemented what he calls a GOS process--goals, objectives and strategies. "Basically, this is a process where at the corporate level, I lay out a series of goals, objectives that quantify the goals, and some of the key strategies to achieve the objectives. Then I do a high-level budget and turn both the GOS and budget to all my direct reports who put their GOSs together that tie to mine. Plus, they take the budget and go to the next level of detail. We take that down the whole management chain, and then we roll it back up. Where the budget numbers don't match, we negotiate. What are we going to have to do to change? Can we change strategies or are we going to have to change objectives? It's always best to try to change strategies to achieve your initial objectives. The biggest challenge is getting people to understand goals, objectives and strategies. Many people will identify objectives which are really goals. You have to think of goals as being qualitative and objectives as being quantitative. What this really does is make people think strategically. It helps improve decision making and people's thought processes. The first year someone is involved is usually a struggle; but when they get to the second or third year, it has become ingrained and you start seeing that they use it for other things," Hennel adds. "I think we're very good at laying out the direction and then giving people the incentive, encouragement and inducement to make things happen."

This all adds up to a very focused team at Silvon. "I feel," Hennel says, "that everyone at Silvon has a clear vision of where we're heading and how they play a role in that. Our value proposition to our customers is that we're going to help them install quickly so they can start getting a return on investment. We know our technology is the best in scalability, and we continue to look at how we make it easy for our customers to deploy the technology. We are very proud of the fact that consulting is a very small part of our product delivery. We average under 20 days per install. We deal with very dynamic data--our clients are constantly moving customers between new sales reps, redistricting stores and re- categorizing products. They need a system that can deal with that change--not a system that requires a full reinstall every year or three full-time people making modifications to keep the system running. When it comes to providing high value with low maintenance, DataTracker delivers," Hennel proudly concludes. And he should be proud. He has built Silvon into a successful software company focused on providing quality solutions for business problems common to enterprises throughout the world. That's Silvon's business: building business solutions.

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